The Shyft Group Reports Second Quarter 2023 Results

July 27, 2023

• Second quarter results in line with management expectations
• Solid operating cash flow performance in the quarter
• Revised full-year 2023 outlook primarily driven by softness in last-mile delivery and motorhome end markets

NOVI, Mich., July 27, 2023 (GLOBE NEWSWIRE) — The Shyft Group, Inc. (NASDAQ: SHYF) (“Shyft” or the “Company”), the North American leader in specialty vehicle manufacturing, assembly and upfit for the commercial, retail and service specialty vehicle markets, today reports operating results for the second quarter ending June 30, 2023.

Second Quarter 2023 Highlights
For the second quarter of 2023 compared to the second quarter of 2022:

• Sales of $225.1 million, a decrease of $7.1 million, or 3.1%, from $232.2 million
• Net income of $4.7 million, or $0.13 per share, compared to $5.3 million, or $0.15 per share
• Adjusted EBITDA of $15.9 million, or 7.0% of sales, an increase of $2.2 million, from $13.7 million, or 5.9% of sales; results include $7.4 million of EV program costs versus $7.3 million in the prior year
• Adjusted net income of $8.7 million, or $0.25 per share, compared to $7.5 million, or $0.21 per share in the prior year
• Consolidated backlog of $510.2 million as of June 30, 2023, down 55.1%, compared to $1.1 billion as of June 30, 2022
• Operating cash flow of $29.7 million, up $38.6 million, compared to an outflow of $8.9 million in the prior year

“We delivered second quarter results in line with our expectations led by strong Specialty Vehicles performance while also driving robust cash generation,” said Daryl Adams, President and Chief Executive Officer. “We experienced challenges in the Fleet Vehicles and Services business as market conditions deteriorated and operational inefficiencies remain. We continue to flex our operations while implementing additional cost reductions to reflect lower short-term demand.”

Second Quarter 2023 Business Segment Highlights
For the second quarter of 2023 compared to the second quarter of 2022:

Fleet Vehicles and Services (FVS)

• Sales of $139.0 million, an increase of $2.1 million, or up 1.5%, from $136.9 million
• Adjusted EBITDA of $12.5 million, or 9.0% of sales, a decrease of $2.0 million, from $14.5 million, or 10.6% of sales
• Segment quarter-end backlog of $437.8 million, down 56.2% compared to $1.0 billion in the prior year

Specialty Vehicles (SV) 

• Sales of $87.6 million, a decrease of $7.7 million, or 8.1%, from $95.3 million
• Adjusted EBITDA of $17.4 million, or 19.8% of sales, an increase of $4.5 million, from $12.9 million, or 13.5% of sales
• Segment quarter-end backlog of $72.4 million as of June 30, 2023, down 46.4% compared to $135.2 million as of June 30, 2022
• Achieved significant milestone with the 100,000^th Isuzu N-Series gas-powered truck produced at Builtmore

Disciplined Capital Allocation
“Our balance sheet continues to be a strength and differentiator for the Company. We are confident in our long-term growth story and ability to generate cash, giving us the flexibility to efficiently deploy capital to maximize shareholder value,” said Jon Douyard, Chief Financial Officer.

The Company deployed $8.3 million of capital in the quarter with the following actions:

• Funded $6.5 million of capital expenditures, including investment in Blue Arc
• Paid regular dividends of $1.8 million reflecting a dividend of $0.05 per share
• $233 million remaining under our existing share repurchase authorization

2023 Financial Outlook
Douyard continued, “Our prior concerns surrounding a tougher demand environment materialized late in the quarter. As softness in the parcel market continued and dealer inventories remained high, last-mile customers deferred and cancelled orders leading to lower OEM chassis production. In addition, consistent with broader recreational vehicle markets, we are experiencing incremental weakness in our motorhome chassis business. These headwinds have negatively impacted our full-year outlook.”

Our revised full-year 2023 outlook, notwithstanding further changes in the operating environment, is as follows:

• Sales to be in the range of $850 million to $950 million compared to the previous outlook of $1.0 to $1.2 billion
• Adjusted EBITDA of $40 to $60 million compared to the previous outlook of $70 to $100 million
• Net Income of $1 to $16 million compared to the previous outlook of $28 to $50 million
• Earnings per share of $0.03 to $0.46 compared to the previous outlook of $0.77 to $1.39
• Adjusted earnings per share of $0.33 to $0.76 compared to the previous outlook of $0.98 to $1.60
• Blue Arc EV second half production remains on track; expect approximately 50 vehicles to be delivered in the fourth quarter

Adams concluded, “We remain confident in the long-term growth profile of the Company. Despite market and economic uncertainty, we expect earnings growth in 2024 as we drive operational improvements and ramp Blue Arc production.”

Conference Call and Webcast
The Shyft Group will host a conference call and webcast at 8:30 a.m. ET today.

The U.S. toll-free dial-in for the conference call is 1-844-868-8845, and the international dial-in number is 412-317-6591. The conference passcode is 10176862.

A live webcast of the conference will also be available on the investor relations page of the company’s website at www.the shyftgroup.com/webcasts.

About The Shyft Group

The Shyft Group is the North American leader in specialty vehicle manufacturing, assembly, and upfit for the commercial, retail, and service specialty vehicle markets. Our customers include first-to-last mile delivery companies across vocations, federal, state, and local government entities; the trades; and utility and infrastructure segments. The Shyft Group is organized into two core business units: Shyft Fleet Vehicles and Services™ and Shyft Specialty Vehicles™. Today, its family of brands include Utilimaster®, Blue Arc™ EV Solutions, Royal® Truck Body, DuraMag® and Magnum®, Strobes-R-Us, Spartan® RV Chassis, Red Diamond™ Aftermarket Solutions, and Builtmore Contract Manufacturing™. The Shyft Group and its go-to-market brands are well known in their respective industries for quality, durability, and first-to-market innovation. The Company employs approximately 4,200 employees and contractors across campuses, and operates facilities in Arizona, California, Florida, Indiana, Maine, Michigan, Missouri, Pennsylvania, Tennessee, Texas, and Saltillo, Mexico. The Company reported sales of $1.0 billion in 2022. Learn more at TheShyftGroup.com.

Forward Looking Statement

This release contains information, including our sales and earnings guidance, all other information provided with respect to our outlook for 2023 and future periods, and other statements concerning our business, strategic position, financial projections, financial strength, future plans, objectives, and the performance of our products and operations that may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We intend the forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in those sections. Generally, we have identified such forward-looking statements by using words such as “believe,” “expect,” “intend,” “potential,” “future,” “may,” “will,” “should,” and similar expressions or by using future dates in connection with any discussion of, among other things, the construction or operation of new or existing facilities, operating performance, trends, events or developments that we expect or anticipate will occur in the future, statements relating to volume changes, share of sales and earnings per share changes, anticipated cost savings, potential capital and operational cash improvements, anticipated disruptions to our operations and industry due to the COVID-19 pandemic, changes in supply and demand conditions and prices for our products, trade duties and other aspects of trade policy, statements regarding our future strategies, products and innovations, and statements expressing general views about future operating results. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking. Forward-looking statements are not historical facts, but instead represent only the Company’s beliefs regarding future events, many of which, by their nature, are inherently uncertain and outside of the Company’s control. It is possible that the Company’s actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements. Management believes that these forward-looking statements are reasonable as of the time made. However, caution should be taken not to place undue reliance on any such forward-looking statements because such statements speak only as of the date when made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from the Company’s historical experience and our present expectations or projections. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from the Company’s historical experience and our present expectations or projections. These risks and uncertainties include, but are not limited to the risks and uncertainties described in “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022, and those described from time to time in our future reports filed with the Securities and Exchange Commission (SEC), which are available at www.sec.gov or our website. All forward-looking statements in this release are qualified by this paragraph. Investors should not place undue reliance on forward-looking statements as a prediction of actual results. We undertake no obligation to publicly update or revise any forward-looking statements in this release, whether as a result of new information, future events, or otherwise.

Contact
Randy Wilson
Vice President, Investor Relations and Treasury
Randy.Wilson@theshyftgroup.com
248.727.3755